The Closure of Dell’s Manufacturing Operation and Ireland’s Movement up the Value C

Monday, 24 October 2011

Seeing the Positive in the Negative: The Closure of Dell’s Manufacturing Operation and Ireland’s Movement up the Value Chain

The Midwest of Ireland was dealt a serious blow when, in 2009, Dell announced the relocation of its manufacturing operation to Lodz in Poland with the loss of 1,900 jobs.

New research carried out by Dr Patrick Collins and Professor Seamus Grimes of the Centre for Innovation and Structural Change at NUI Galway, has attempted to uncover the fallout of this decision and ask what it has meant for the competitive positioning of Ireland more generally.

“Dell’s decision was led by many factors including consumer demand and changing tastes, but much of the media pointed to the fact that Ireland had ‘priced itself out of the market’ and had become uncompetitive”, said Dr Collins. “The reality is that the Dell closed only its manufacturing operation in Limerick, it continues to employ many more in other higher end functions there.”

The research shows the Dell case to be something of a microcosm for Ireland’s long term relationship with foreign direct investment. This is a relationship that has been evolving over the past 50 years that has seen lower value added jobs being replaced by higher valued added ones.

“In its most simplistic form it’s a case of services replacing manufacturing, however, the picture is considerably more complex, some manufacturing techniques employed by the multinationals are highly evolved and quiet sustainable”, added Dr Collins.

The research has been published in an article entitled ‘Cost-competitive places: shifting fortunes and the closure of Dell's manufacturing facility in Ireland’ in the international peer-reviewed journal European Urban and Regional Studies. This work tries to place Ireland in a global context in an era of economic turmoil.

The article equates Ireland to a developed country and notes that, like many of its neighbours in Western Europe, it has been losing jobs to countries in Eastern Europe and Asia. The research focuses on what it terms a ‘grim’ period for Ireland’s job market in early 2009.

In a matter of months the technology sector haemorrhaged nearly 10,000 jobs, over 80% of which were relocated to other countries. However, the positive is noted by the fact that the same period of time saw over 6,000 jobs announced for the same sector. “Taking the positive from the negative here is that the jobs we are gaining are significantly higher paid and more sustainable ones with brighter prospects to the ones we are losing”, Dr Collins noted.